Moving toward better loan policies [Archives:2002/13/Business & Economy]

BY MAHYOOB
AL-KAMALI
YEMEN TIMES ECONOMIC EDITOR
Yemens government is moving towards a revamped policy on foreign loans and assistance, due to its inability to go ahead with some projects that are funded from outside the country.
This change comes after warnings that foreign loans are wasted, while many areas of the country are still deprived of basic projects.
According to some officials, financial sources the overall debts of Yemen total $4.9 billion of which $1 billion are loans used for development projects constructed after 1995 and during the economic reform program. Outlining an appropriate mechanism for organizing loans is another step to protect public properties and reduce the size of loans.
The current economic reform program aims to reduce the amount of foreign debts. Despite the success of the government through the assistance of the donor countries in rescheduling the foreign loans, which dropped from $10 billion in 1994 to less than $3.9 billion in 1997, the government resorted to ask for loans again, which raised Yemen’s debts to $4.9 billion at the beginning of 2002. Despite all these loans. many of the projects funded through loans are still incompleted.
Yemen needs a radical solution to end its current dependency on foreign loans and this might be achieved through adopting these mechanisms:
Assess the volume of crippled projects, find the reasons behind that and hold those responsible to be accountable.
Map out the needs of the remote areas for development projects and specify the ratio of the needed financing as per the local and foreign funds.
Entrust the implementation of those projects to specialized financial committees. These committees should also be held accountable in case they fail to carry out the duties entrusted to them.
Now, it is no longer acceptable for Yemeni to ask for loans merely for purchasing arms, as it will have to repay those. The repayment period will extend for 20 years. Most of these debts are owed to Russia, which has exempted Yemen from 67% of the debts owed to it.
We hope that the new proposal concerning the proper utilization of loans will have fruitful results in implementing development projects in Yemen.

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